Asia-Pacific M&A Market Continues to Reward Acquirers

by CFO Innovation Asia Staff, 29 June 2012

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topics:
Finance and Banking Mergers and Acquisitions

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M&A Towers Watson

Acquirers within both European and Asia-Pacific markets have continued to outperform their respective regional MSCI indices, based on year-to-date figures for the quarter.

The second-quarter figures from Towers Watson’s Quarterly Deal Performance Monitor (QDPM), which presents data on all deals with a value of at least $100 million completed in the quarter, shows that European acquirers emerged as the top-performing region based on these figures, outperforming their MSCI index by 3.8 percentage points (pp).

Asia-Pacific acquirers also fared well, generating a return outperformance of 1.1pp. However, counterparts in North America saw a weakening in year-to-date performance, with a 3.3pp fall in returns, compared to +4.0pp seen in the equivalent quarter last year.

“Acquirers, who persevere in seeing a deal through to completion, have experienced positive gains, despite a languishing market," says Steve Allan, M&A Practice Leader for Europe at Towers Watson.

This is the case in Europe, where it would appear that buyers who can demonstrate that a deal represents a robust route to growth and can complete the acquisition are being rewarded with market outperformance.”

North America bucks trend of general market slow down

The positive results for acquirers have come in spite of a sustained contraction in overall activity within the market, which has seen the number of deals completed over the quarter1 fall from a high of 227 deals in Q2 2011 to 139 deals in Q2 2012; representing a fall of almost 40%.

“The general malaise that we have witnessed in the market over the past 12 months is, for the most part, a direct result of increased risk aversion and lack of confidence caused by an increasingly volatile market climate and uncertain economic conditions," explains Allan. "It is therefore no coincidence that we have seen a significant decrease in the number of completed deals, particularly for European and Asian acquirers."

However, one market that has proved particularly resilient to the most recent downturn in deal volumes has been North America, which has seen the number of deals executed stay almost constant across several consecutive quarters.

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